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###### Department of Energy

###### Federal Energy Regulatory Commission

      ( print page 105790)    

## Notice of Request for Comments

                        On November 19, 2024, the North American Electric Reliability Corporation (NERC) submitted to the Federal Energy Regulatory Commission (Commission) an Interregional Transfer Capability Study (ITC Study) pursuant to section 322 of the Fiscal Responsibility Act of 2023 (Fiscal Responsibility Act).[1]                                                  On November 25, 2024, the Commission issued a Notice of Request for comments stating that all interested persons are invited to file comments on this ITC Study. This supplemental notice is issued to include the ITC Study and associated NERC transmittal letter.[2]                                                  Comments should be filed no later than 60 days after the date of publication of this supplemental notice in the                         **Federal Register**                        . We request the public to submit comments in the format indicated below.                    

                        In June 2023, Congress passed the Fiscal Responsibility Act, which requires the Commission-approved Electric Reliability Organization (                        *i.e.,*                         NERC),[3]                                                  in consultation with each regional entity and each transmitting utility [4]                                                  that has facilities interconnected with a transmitting utility in a neighboring transmission planning region, to conduct a study of total transfer capability [5]                                                  between transmission planning regions. The Fiscal Responsibility Act requires the ITC Study to include:                    

(1) Current total transfer capability between each pair of neighboring transmission planning regions.

(2) A recommendation of prudent additions to total transfer capability between each pair of neighboring transmission planning regions that would demonstrably strengthen reliability within and among such neighboring transmission planning regions.

(3) Recommendations to meet and maintain total transfer capability together with such recommended prudent additions to total transfer capability between each pair of neighboring transmission planning regions.

                        The Fiscal Responsibility Act requires NERC to submit the ITC Study to the Commission no later than 18 months after the date of enactment of the Act (                        *i.e.,*                         by December 2, 2024). After the ITC Study is submitted to the Commission, the Commission must publish the study for public comment and, no later than 12 months after the end of the public comment period, submit a report on its conclusions to Congress and include recommendations, if any, for statutory changes.[6] 

                        Comments may be filed electronically via the internet.[7]                                                  Instructions are available on the Commission's website                         *http://www.ferc.gov/​docs-filing/​efiling.asp.*                         For assistance, please contact FERC Online Support at                         *FERCOnlineSupport@ferc.gov*                         or toll free at 1-866-208-3676, or for TTY, (202) 502-8659. Although the Commission strongly encourages electronic filing, documents may also be paper-filed. To paper-file, submissions sent via the U.S. Postal Service must be addressed to: Federal Energy Regulatory Commission, Office of the Secretary, 888 First Street NE, Washington, DC 20426. Submissions sent via any other carrier must be addressed to: Federal Energy Regulatory Commission, Office of the Secretary, 12225 Wilkins Avenue, Rockville, Maryland 20852.                    

                        For more information about this Notice, please contact Jessica L. Cockrell at                         *jessica.cockrell@ferc.gov*                         or 202-502-8190. For legal information, please contact Gonzalo E. Rodriguez at                         *gonzalo.rodriguez@ferc.gov*                         or 202-502-8568.                    

Dated: December 17, 2024.

Debbie-Anne A. Reese,

Secretary.

## Requested Format for ITC Study Comments

We request that commenters use the following format, based on the correlated headings in the ITC Study submittal, to indicate which aspects of the submittal are being addressed in a comment. Commenters need not address all headings outlined below.

## Appendix A: Interregional Transfer Capability Study 2024

A. Chapter 1: The Reliability Value of Transfer Capability

B. Chapter 2: Overview of ITC Study Scope and Terminology

1. ITC Study Scope

2. Stakeholder Participation

3. General Comments on the ITC Study Scope and Terminology

C. Transfer Capability Analysis (Part 1)

1. Chapter 3: Transfer Capability (Part 1) Study Process

2. Chapter 4: Transfer Capability (Part 1) Study Results

3. Other Comments on the Transfer Capability Analysis (Part 1)

D. Recommendations for Prudent Additions To Transfer Capability (Part 2) and Recommendations To Meet and Maintain Transfer Capability (Part 3)

1. Chapter 5: Prudent Additions (Part 2) Inputs

2. Chapter 6: Prudent Additions (Part 2) Process, Including Energy Margin Analysis Results

3. Chapter 7: Prudent Additions (Part 2) Recommendations

4. Chapter 8: Prudent Additions (Part 2) Sensitivity Analysis

5. Chapter 9: Prudent Additions (Part 2) Transmission Planning Region-Specific Results

6. Chapter 10: Meeting and Maintaining Transfer Capability (Part 3)

7. Other Comments on Prudent Additions (Part 2)

8. Other Comments on Meeting and Maintaining Transfer Capability (Part 3)

E. Future Work

F. ITC Study Appendices (A-J)

G. Additional Comments Outside the Specific Report Sections

## United States Of America  Before the  Federal Energy Regulatory Commission

North American Electric Reliability Corporation, Docket No.  _____ 

## North American Electric Reliability Corporation

## Interregional Transfer Capability Study as Directed in the Fiscal Responsibility Act of 2023

                            Candice Castaneda, Senior Counsel, North American Electric Reliability Corporation, (202) 400-3000,                             *candice.castaneda@nerc.net*.                        

*Counsel for the North American Electric Reliability Corporation*.                        

November 19, 2024.

## Table of Contents

I. Executive Summary

I. Introduction to NERC and the ERO Enterprise

II. Overview of the Interregional Tranfer Capability Study

                            a. Calculating Current Total Transfer Capability                                  ( print page 105791)    

b. Identifying Prudent Additions to Transfer Capability to Demonstrably Strengthen Reliability

c. Recommendations To Meet and Maintain Sufficient Transfer Capability

III. Consultation With Regional Entities and Transmitting Utilities

IV. Conclusion

Appendix A—Interregional Transfer Capability Study 2024

Appendix B—List of Stakeholder Engagement Activities

Appendix C—Letters to Transmitting Utilities Regarding Interregional Transfer Capability Study

Appendix D—Advisory Group Roster, ITCS Study Team Roster, and Schedule of Monthly Public Advisory Group Meetings

## United States of America  Before the  Federal Energy Regulatory Commission

North American Electric Reliability Corporation, Docket No.  _____ 

## North American Electric Reliability Corporation

## Interregional Transfer Capability Study as Directed in the Fiscal Responsibility Act of 2023

                            The North American Electric Reliability Corporation (“NERC”) respectfully submits the Interregional Transfer Capability Study (“ITCS” or “Study”) directed by the United States (“U.S.”) Congress in the Fiscal Responsibility Act of 2023 (“Fiscal Responsibility Act”) for Federal Energy Regulatory Commission consideration.[8]                                                          The ITCS was prepared by NERC as the Electric Reliability Organization (“ERO”) [9]                                                          in consultation with NERC's six Regional Entities (together with NERC, the “ERO Enterprise”) [10]                                                          and transmitting utilities.                        

Over the past 15 months, NERC has developed the attached ITCS (Appendix A) in consultation with stakeholders to provide:

                            (i) Current total transfer capability (“TTC” or “transfer capability”) between each pair of neighboring transmission planning regions in the U.S.; [11] 

                            (ii) Recommendations for technically prudent additions to TTC between pairs of neighboring transmission planning regions where these additions would demonstrably strengthen reliability; [12] 

(iii) Recommendations on how to meet and maintain TTC now and as enhanced in response to the ITCS findings.

                            As stated herein and detailed in the attached materials, the ITCS is the first-of-its-kind assessment of transmission transfer capability under a common set of assumptions.[13]                                                          Transmission assessments, like the ITCS, are crucial to mitigating future risks to Bulk Power System (“BPS”) reliability, although other approaches beyond transmission (such as local generation or demand-side solutions) can also mitigate future energy risks. The ITCS focuses on transfer capability in accordance with the congressional directive, while acknowledging that other processes and pending projects may help support a reliable future grid. The ITCS is not designed to be a transmission plan or blueprint.                        

                            The ITCS demonstrates that sufficient transfer capability and resources exist at present to maintain energy adequacy under most scenarios. As discussed below and in the attached ITCS, however, when calculating current transfer capability and projected future conditions,[14]                                                          the ITCS identifies potential energy inadequacy across several transmission planning regions in the event of extreme weather. This finding confirms congressional and electric industry concerns that North American transmission infrastructure may become insufficient to maintain energy adequacy when considering the changing resource mix, extreme weather events, and increasing demand. Therefore, using the assumptions underlying the analysis, the ITCS recommends an increase of 35 GW of transfer capability across different regions as technically prudent additions to demonstrably strengthen reliability. The ITCS bases its analysis of prudence and the extent to which recommendations would demonstrably strengthen reliability according to the anticipated impact of the recommendations on BPS reliability in terms of energy adequacy. Further, the ITCS recommends region-specific enhancements to transfer capability, because a one-size-fits all approach across the U.S. may be inefficient and ineffective.                        

The ITCS is an essential element of the continuing transmission discussion in North America. The ITCS demonstrates a significant opportunity to improve the use of surplus resources when they are available during extreme weather events and shows how interregional transmission can maximize the use of local resources, including storage and demand response. Further, it highlights the continuing importance of integrated transmission and resource planning, as increasing transfer capability without surplus available energy would be inefficient. NERC looks forward to the Commission's proceeding to examine the ITCS, opportunities identified therein, and stakeholder comments in anticipation of the Commission's report to U.S. Congress.

## I. Executive Summary

The Bulk Power System is a complex grid that has evolved over the past several decades to include an integrated network of generation, transmission, and distribution across vast geographic areas. NERC is focused on assuring the reliability of the BPS throughout the ongoing North American energy transformation. As the grid modernizes, governmental authorities and the electric industry are rising to the challenge to ensure that continued reliability accompanies that growth.

                            On June 3, 2023, the President signed into law the Fiscal Responsibility Act in which Congress (as part of measures associated with the debt ceiling) required NERC to conduct an assessment by December 2, 2024 of the total transfer capability between transmission planning regions.[15]                                                          The resulting ITCS analyzes the amount of energy that can be moved or transferred reliably from one area to another area of the interconnected transmission systems. This transfer capability is a measure of the system's ability to address energy deficiencies by relying on resources in neighboring regions and is a key component of a reliable and resilient BPS. Recent and                                   ( print page 105792)                                continuing resource mix changes require greater access and deliverability of resources between neighboring systems to maintain reliability, particularly during widespread, extreme weather conditions.                        

                            Ensuring a transmission system with sufficient transfer capability between transmission planning regions is important to support energy adequacy. In the interest of public health, safety, and security, the electric industry must continue advancing improved planning to support reliable energy supplies under an evolving grid with more frequent extreme weather conditions. As a result of the changing resource mix and extreme weather, interregional energy transfers play an increasingly pivotal role.[16]                                                          NERC assessments and experiences during recent events, such as the Western Interconnection Heatwaves of 2020 and 2022, Winter Storm Uri in 2021, and Winter Storm Elliott in 2022, demonstrate that action is warranted to support energy adequacy going forward. More transfer capability and a carefully planned resource mix are desirable to address these identified challenges (such as extreme weather, existing resource retirements,[17]                                                          and natural gas reliance), as well as the ongoing electrification of the economy with its growing transportation sector, industrial loads, and data centers. The ITCS is an integral part of that discourse by providing an independent, reliability-focused assessment of the extent of transfer capability across the transmission system and opportunities to harness that potential as we collectively prepare for the future.                        

                            In the first part of the ITCS, NERC calculates current transfer capability in a manner that combines base transfer levels together with first contingency incremental transfer capability for each of the winter and summer seasons, (                            *see infra*                             Section II.a.). Based on these calculations, NERC determines that transfer capability varies widely across North America with import capability anywhere between 1% to 92% of the associated peak loads. The ITCS shows that transfer capability varies seasonally, regionally, and under different system conditions. The ITCS also generally finds lower transfer capability in the Mountain States, Great Plains, Southwest, and Northeast, with greater capability in the West Coast, Great Lakes, and Mid-Atlantic areas. The magnitude of transfer capability is not itself a measure of energy adequacy, however, these findings informed the second part of the ITCS.                        

                            The second part of the ITCS contains an energy margin analysis that enabled NERC to identify whether a particular transmission planning region would be at risk for energy inadequacy considering the calculated TTCs and extreme weather events. The ITCS characterizes this risk for energy inadequacy as a “deficiency.” In each scenario where the ITCS identifies a deficiency in a transmission planning region, NERC further applied a six-step process to examine the extent to which additional transfer capability could mitigate that deficiency and thereby demonstrably strengthen reliability.[18]                                                          The Part 1 TTC calculation (which includes simultaneous import capability analysis) together with the Part 2 prudent additions analysis (which includes energy margin analysis of past weather events applied to the projected resource mix and demand) ensure the reasonableness and therefore prudence of ITCS recommended additions to transfer capability. The last part of the ITCS provides recommendations to meet and maintain transfer capability. The resulting recommendations identify directional (rather than prescriptive) guidance for policymakers and industry. The ITCS provides a roadmap for understanding where it may be beneficial to enhance transmission to support a reliable future grid, without mandating specific projects or a minimum level of transfer capability.                        

The ITCS is a unique assessment centered on reliability. Transmission planners, regional transmission organizations/independent system operators (“RTOs/ISOs”), and policymakers might consider other factors such as economics, environmental effects, and broader policy objectives when deciding which solutions to implement to address reliability issues. Different markets, RTOs/ISOs, or regions of the U.S. may have different approaches to evaluate transfer capability and prudent additions thereto. The ITCS, for example, in some instances subdivided RTO/ISO and Commission Order No. 1000 areas to avoid masking issues between neighboring transmitting utilities within the scope of the Congressional directive. The ERO Enterprise approach was specifically designed to evaluate TTC and potential prudent additions to transfer capability that would demonstrably strengthen reliability without regard to specific market structures, economic considerations, or policy matters in the expectation that the Commission, U.S. Congress, States, and industry will use NERC's ITCS as part of this broader evaluation.

Based on the analysis in Part 2 of the ITCS, NERC identifies that in the present year, there are relatively few deficiencies across transmission planning regions. As a result, the ITCS suggests that existing infrastructure is generally sufficient at this time to maintain energy adequacy under most scenarios (barring severe conditions such as limitations on gas generation performance during cold weather and natural gas production and transportation challenges for electric generators). This conclusion also establishes 2024 as a useful reference point for future comparisons.

                            Nevertheless, when examining the ten-year forward-looking case that accounts for the future resource mix and forecasted load, energy inadequacy was identified across almost half of the studied transmission planning regions.[19]                                                          This confirms congressional and electric industry concern that, given the changing resource mix, extreme weather, and anticipated demand, transmission infrastructure may place a strain on energy adequacy in the future. As a result, based on calculated deficiencies and the broader six-step approach to identify prudent additions to demonstrably strengthen reliability, the ITCS recommends 35 GW of additional transfer capability across different areas of the U.S. As discussed in Section II.b. below, transmission planning regions across North America would benefit from increased transfer capability. Since the needed import capability, as analyzed, varied significantly across the U.S., a one-size fits all requirement or approach to additional transfer capability is expected to be inefficient and ineffective. The increased transfer capability recommended in the ITCS, in addition to other measures outside of its scope, such as resource adequacy and fuel assurance, would demonstrably improve energy adequacy under reasonably anticipated extreme conditions.[20] 

                            Part 3 of the ITCS also provides recommendations how to meet and maintain transfer capability.                             *See infra*                             Section II.c. These recommendations should be taken, together with remainder of the ITCS, as foundational insights for further discussions and decisions on regulatory and legislative solutions. Planners, for example, should consider conditions impacting their systems and those of neighboring transmitting utilities while also considering resource adequacy.[21]                                                          The ITCS also does not evaluate particular projects. Rather, under a holistic approach, the Study recommends how much additional transfer capability at each interface would strengthen the grid.                        

## I. Notices and Communications

Notices and communications with respect to this filing may be addressed to:

                            Sonia Rocha, Senior Vice President, General Counsel, and Corporate Secretary, North American Electric Reliability Corporation, 1401 H Street NW, Suite 410, Washington, DC 20005, 202-400-3000 office,                             *sonia.rocha@nerc.net*

                            Candice Castaneda, Senior Counsel, North American Electric Reliability Corporation, 1401 H St. NW, Suite 410, Washington, DC 20005, 202-400-3000,                             *candice.castaneda@nerc.net*

## I. Introduction to NERC and the ERO Enterprise

                            Electricity is a key component of the fabric of modern society. NERC's mission is to assure the effective and efficient reduction of risks to the reliability and security of the grid. The vision of the ERO Enterprise is a                                   ( print page 105793)                                highly reliable and secure North American BPS. The Regional Entities help NERC support reliability across various interconnections with differing needs and characteristics.[22] 

                            When Congress enacted the Energy Policy Act of 2005 [23]                                                          and section 215 of the Federal Power Act, it entrusted the Commission with: (i) approving and enforcing rules to ensure the reliability of the BPS; and (ii) certifying an ERO that would be charged with developing and enforcing mandatory Reliability Standards, subject to Commission approval, and with assessing reliability and adequacy of the BPS in North America.[24]                                                          Section 215 and Commission regulation reflect certification of an ERO subject to Commission oversight.[25]                                                          In 2006, the Commission certified NERC as the ERO.[26] 

                            Consistent with NERC's responsibility to “conduct periodic assessments of the reliability and adequacy of the bulk-power system in North America” [27]                                                          such as NERC's Long-Term Reliability Assessment (“LTRA”), Summer Assessment, Winter Assessment, and special assessments, the Fiscal Responsibility Act tasked NERC with preparing the ITCS in consultation with the Regional Entities and transmitting utilities.                        

## II. Overview of the Interregional Tranfer Capability Study

The Fiscal Responsibility Act requires the ERO, in consultation with the Regional Entities and transmitting utilities with facilities neighboring another in a neighboring transmission planning region (referred to generally as “neighboring transmitting utilities”), to conduct a study of total transfer capability (also known as “TTC”) between transmission planning regions that contains:

(1) Current total transfer capability between each pair of neighboring transmission planning regions.

(2) A recommendation of prudent additions to total transfer capability between each pair of neighboring transmission planning regions that would demonstrably strengthen reliability within and among such neighboring transmission planning regions.

                            (3) Recommendations to meet and maintain total transfer capability together with such recommended prudent additions to total transfer capability between each pair of neighboring transmission planning regions.[28] 

                            Consistent with NERC's collaborative process and congressional directive, the ITCS was prepared over a 15-month period with significant stakeholder engagement, as discussed in Section III below and reflected in Appendices B through D. The ITCS examined current TTC as Part 1 of the analysis. Part 2 of the Study completed an energy margin analysis that compared TTC against 12 weather years (including extreme weather) to identify transmission planning region energy deficiencies that warrant prudent additions to TTC to demonstrably strengthen reliability.[29]                                                          As Part 3 of the ITCS, the ITCS recommended methods to meet and maintain current TTC and enhanced TTC. These recommendations interpreted the ITCS as part of the broader discourse between the Commission, U.S. Congress, States, other policymakers, and the electric industry to leverage the ITCS findings along with more specific regional, policy, market, economic, and environmental considerations. Finally, the ERO Enterprise plans to continue regular assessments of transfer capability that will consider the latest developments in resource mixes, transmission infrastructure, new load projections, and changing weather and climate patterns.                        

### a. Calculating Current Total Transfer Capability

                            In accordance with the Fiscal Responsibility Act, the fundamental question of the ITCS is the ability of the BPS to support transfers of energy between transmission planning regions when needed to ensure adequate energy to meet demand. The first required component of the ITCS is calculating current transfer capability, or TTC, between pairs of neighboring transmission planning regions.[30] 

                            To calculate TTC, the ITCS study team, comprised of ERO Enterprise staff and consultants, first determined appropriate transmission planning regions for purposes of the Study after coordinating with the ITCS Advisory Group. To establish transmission planning regions for purposes of the Study, NERC, working with the Regional Entities, selected a set of interfaces that included all pairs of neighboring transmission planning regions to enable the ITCS performance of transfer analysis from source (exporting) region to sink (importing), and vice versa. Only electrically connected neighboring systems were evaluated to identify the transmission planning regions for purposes of Part 1 of the ITCS.[31]                                                          The ITCS regions were smaller than the Commission's Order No. 1000 regions and those that RTOs/ISOs might use to provide a more granular analysis of potential TTC limitations and to enable the ITCS to identify key constraints to interregional TTC.                        

As reflected in NERC's August 2024 posted materials, the transmission planning regions were established as follows:
      ( print page 105794)    
                            After the identification of transmission planning regions, the ITCS calculated TTC according to the following steps: [32] 

                            (i) Select base cases using relevant Eastern Interconnection and Western Interconnection base cases created through Reliability Standard MOD-032-1 processes; [33] 

                            (ii) Calculate TTC using Area Interchange method as the sum of base transfer levels together with first contingency incremental transfer capability; [34] 

(iii) Adjust for facility monitoring criteria and thresholds to prevent undue limitation of transfer capability results based on heavily loaded, electrically distant elements to avoid the appearance of artificially constrained TTC;

(iv) Ensure special interface considerations (such as pertinent remedial action schemes) are understood and properly reflected in study results; and

(v) Analyze total import capabilities of each transmission planning region (although not required under the Fiscal Responsibility Act) as technically requisite to appropriately model system capability for purposes of the Part 2 analysis of any prudent enhancements to TTC.

                            This analysis identified current TTC as illustrated in the maps discussed in more detail in the ITCS at Appendix A. These TTC results are highly dependent on the base cases and modeling assumptions described in the ITCS. The ITCS did not attempt to optimize dispatch or topology to maximize TTC, just as it also was designed to avoid underestimating TTC. The ITCS used the steps highlighted above to avoid the appearance of artificially constrained TTC.[35] 

The ITCS found that transfer capability varies seasonally and under different system conditions that limit transmission loading so that it cannot be represented by a single number. Transfer capability also varies widely across North America, with total import capability between 1% and 92% of peak load. Transfer capabilities were observed as generally higher in the West Coast, Great Lakes, and mid-Atlantic areas, while relatively lower in the Mountain States, Great Plains, Southeast, and the Northeast regions. In addition, the ITCS found limited transfer capability between Interconnections (Western Interconnection, Eastern Interconnection, ERCOT Interconnection (“ERCOT”), and Québec). As NERC discussed these Part 1 results with industry during the Summer of 2024, it explained that the findings suggested that Part 2 analysis would probably identify prudent additions to TTC to strengthen reliability. NERC underscored that the magnitude of transfer capability is not itself a measure of energy adequacy. Rather, the identified TTC provides the foundation for subsequent energy margin analysis in Part 2 of the ITCS.

### b. Identifying Prudent Additions to Transfer Capability to Demonstrably Strengthen Reliability

                            The Fiscal Responsibility Act requires NERC to consider and recommend prudent additions to TTC “between each pair of neighboring transmission planning regions that would demonstrably strengthen reliability within and among such neighboring transmission planning regions.” [36]                                                          For the purposes of determining a “prudent addition,” NERC looked to the standard used in Commission precedent in electric utility ratemaking proceedings, which provides that “prudence” means a determination of whether (1) a reasonable entity (2) would have made the same decision, (3) in good faith, (4) under the same circumstances, and (5) at the relevant point in time.                        

                            Determining exactly how much additional transfer capability is “prudent” can depend on the totality of factors and circumstances. For example, as part of examining the totality of circumstances, the Commission has considered matters such as whether activities                                   ( print page 105795)                                have enhanced the ability to restore service, achieved significant efficiencies, reduced costs or time delays, and/or made efficient use of resources to ensure reliability.[37]                                                          As discussed immediately below, NERC applied a six-step process to ensure that the ITCS's tailored recommendations for prudent additions to transfer capability for certain pairs of neighboring transmission planning regions are those that a reasonable entity would have made in good faith under the same circumstances and at the same point in time considering reliability of the system as the driving factor.                        

NERC underscores that nothing in the ITCS should be used as justification for a particular project and that no part of the ITCS is intended as evidence regarding prudence in any ratemaking proceeding. The ITCS does not include economic assessments, project-specific recommendations, transmission expansion analysis, operational mitigation or capacity expansion planning. A holistic view of the BPS and a thorough understanding of its behavior will be essential when calculating or increasing transfer capability.

The ITCS particularly examined the extent to which recommended enhancements would be reasonably expected to demonstrably strengthen reliability of the BPS. To do so, the ITCS examined whether the potential recommendation would strengthen reliability, serve load under extreme conditions, and avoid creating unintended reliability concerns as follows:

                            1.                             *Strengthen Reliability:*                             Provides a potential solution that enables more flexibility between transmission planning regions and access to resources that may be available during local energy deficits.                        

                            2.                             *Serve Load Under Extreme Conditions:*                             Provides a solution that serves future demand during extreme conditions, which is a more restrictive design basis than current resource adequacy constructs.                        

                            3.                             *Does Not Create Unintended Reliability Concerns:*                             Recommendations for larger connections between transmission planning regions will require detailed system studies to assure system stability.                        

Under Part 2 of the ITCS, the ITCS conducted energy margin analysis of resource availability and interregional transfers across 12-years of meteorological conditions and extreme weather data to examine whether the transfer capability calculated for a pair of neighboring transmission planning regions would be unable to meet energy needs under times of stress, being thus “deficient” and reflecting a risk of energy inadequacy for those regions.

As a result, where the ITCS energy margin analysis found a deficiency and corresponding risk, NERC led a further layer of study that applied several considerations and criteria under a six-step process to evaluate whether, and how much, additional transfer capability would mitigate the potential risk of energy inadequacy created by the deficiency.

The six-step process entails the following and is discussed in detail in Chapter 6 of the ITCS at Appendix A:

i. Identify hours of resource deficiency

ii. Quantify the maximum resource deficiency

iii. Prioritize constrained interfaces

iv. Allocate additional transfer capability

v. Iterate until resource deficiencies are mitigated

vi. Finalize prudent level of transfer capability

A diagram of the analysis will help explain further:
      ( print page 105796)          ( print page 105797)    
The ITCS recommended prudent additions to transfer capability to the extent that results reflected that enhanced transfer capability would assuage the risk of energy inadequacy (as reflected by the deficiencies shown after energy margin analysis).

                            In total, across various regions of the U.S., the ITCS recommends 35 GW of additional transfer capability to demonstrably strengthen reliability. These recommendations are detailed in the ITCS at Appendix A and break down according to the following table Table ES.1: [38] 

                            In making these recommendations, NERC acknowledges that transfer capability is only one part of the overall equation and that other elements such as generation resource availability, new load projections, additional weather information, and demand response should also be taken into account.[39]                                                          Moreover, these recommendations do not account for economic, environmental, permitting or policy considerations that the Commission, U.S. Congress, other policymakers, and the electric industry may apply following the ITCS.                        

### c. Recommendations To Meet and Maintain Sufficient Transfer Capability

                            The final requirement of the Fiscal Responsibility Act of 2023 is to develop recommendations to meet and maintain transfer capability together with recommended prudent additions.[40]                                                          The ITCS provided recommendations to support transfer capability in the future without specifying a particular set of projects or approach. This recognizes that increased transfer capability is one of many options for addressing the identified energy deficiencies. Such options at a high level include:                        
    - Increase transfer capability to neighbors with surplus resources
    - Construct local generation
    - Increase demand response resources
    - Accept the identified risks during extreme events (assuming other reliability thresholds are met)

Timing for these approaches may vary, so further studies are needed for implementation. Grid operators must also be prepared to maintain BPS reliability through emergency measures (including rotating outages if necessary) meanwhile.

If planners elect to increase transfer capability to meet the recommendations listed in the ITCS, options to consider include:
    -  Upgraded transmission infrastructure:                              Such as building new lines and reconductoring existing lines or raising existing tower structures where feasible.                        
    -  Remedial action schemes (“RAS”):                              Increasing transfer capability via adjustments to RAS may be helpful in the short-term while other solutions are implemented. RAS are not advised as a long-term solution as these schemes introduce higher operational complexity.                        
    -  Dynamic line ratings (“DLR”):                              DLR could use real-time and forecasted weather conditions to continuously calculate the thermal capacity of transmission lines and may at times facilitate increased transfer capability during favorable weather conditions. However, DLR may not be suitable in all situations.                        
    -  Power flow control devices:                              Power flow control devices with newer digital control                                    ( print page 105798)                                  technology that allows for faster responses to system needs may help support transfer capability and enhance the transmission planning process.                        

With regard to maintaining transfer capability, the ITCS explained that actual transfer capability available during real-time operations may be different from that calculated due to system conditions during actual operations. A certain level of transfer capability cannot always be maintained due to those changing system conditions and, therefore, the ITCS focused on what can be accomplished during the planning horizon. These recommendations to maintain transfer capability include:
    -  Coordination Agreements:                              Strong coordination procedures and agreements can maximize available support during stress conditions (such as extreme weather events). This coordination could include rigorous maintenance activities and coordinated maintenance to avoid overlapping with periods of increased stress.                        
    - Future Studies:

                            ○                             *ERO Enterprise Studies:*                             The ERO Enterprise, working with industry, is planning to conduct regular assessments rolled into future Long-Term Reliability Assessment reports that will consider developments in this area. NERC is also considering the issues as part of its Energy Assessment Strategy.                        

                            ○                             *Planning/Maintenance:*                             Planners can evaluate changes in transfer capability as part of regular processes.                        
    - Regulatory and Policy Mechanisms:

○ The ITCS noted that a uniform minimum transfer capability requirement may not be an effective or efficient approach to ensure energy adequacy.

○ The ITCS recommended that policy makers consider mechanisms to address existing challenges associated with siting/permit approvals, cost-allocation, and multi-party operating and maintenance agreements.
    - Reliability Standards:

○ The ITCS clarified that it is not NERC's intent to develop Reliability Standard modifications to require entities to meet and maintain a certain transfer capability, without prejudice to NERC's consideration of modifications in the future of matters such as assessments associated with planned transfer capability.

○ NERC has two standard development projects (Project 2022-03 Energy Assurance with Energy-Constrained Resources and 2024-02 Planning Energy Assurance) related to energy assurance and the assessment of energy adequacy.

                            System studies are urged to ensure careful deployment of ITCS recommendations. To give these recommendations meaning, transmission planners and planning coordinators will need detailed studies to select projects or actions that take advantage of the opportunity identified in the ITCS without inadvertent consequences. The ITCS explained limitations on its scope as well as steps that stakeholders could take to further build on the opportunities identified therein.[41]                                                          As highlighted throughout the ITCS and this filing, the ITCS is intended as a launch-pad to further North America's efforts to plan infrastructure and coordination that supports a modern grid.                        

NERC urges policymakers and industry to carefully consider how to leverage the recommended additions to transfer capability outlined in the ITCS. As mentioned above, the recommendations identify directional, rather than prescriptive, guidance. The ITCS provides a roadmap for understanding where transmission may benefit from enhancement, without mandating specific projects or a minimum level of transfer capability. While the ITCS recommends increased transfer capability on particular interfaces, NERC does not endorse projects or particular approaches. This is intentional because planners must evaluate potential downstream impacts of increased transfer capability. For example, while greater transfer capability can improve energy adequacy, there can be situations where a large transfer of energy has consequences for other aspects of reliable system operations such as system stability, voltage control, and measures to minimize the potential for cascading outages. Transmission planning regions must coordinate system enhancements to support rational and effective implementation of the ITCS findings. Further, planners might consider other options not within the scope of the ITCS. While the ITCS focuses on transfer capability per congressional directive, regions might construct additional resources or increase demand response resources. Further, the ITCS acknowledges that existing or planned projects may also be responsive to the opportunities and recommendations identified in the ITCS. As stated above, the ITCS findings should be considered foundational insights for further discussions and decisions.

## III. Consultation With Regional Entities and Transmitting Utilities

                            The Fiscal Responsibility Act requires that NERC conduct the ITCS in consultation with the six Regional Entities and neighboring transmitting utilities.[42]                                                          Consultation is understood as a meaningful exchange of information prior to final decision-making.[43]                                                          Consistent with Congressional directive and NERC's regular collaborative process as the ERO Enterprise coordinating with stakeholders to ensure reliability, NERC frequently consulted with the Regional Entities and transmitting utilities throughout the design and execution of the ITCS.                        

As illustrated below, the stakeholder engagement process included 14 Advisory Group meetings, three letters to transmitting utilities seeking input and feedback, presentations at NERC Board of Trustee (“Board”) meetings and over 100 industry and trade group meetings. In addition, to facilitate these conversations and ongoing exchange of perspectives as NERC led the ITCS, NERC publicly published scoping documents and quarterly updates associated with the ITCS on NERC's ITCS web page. Further, NERC published the parts of the ITCS via a series of three reports (an introductory Overview report, transfer capability analysis Part 1 report, and prudent recommended additions to transfer capability Part 2 and 3 report) prior to finalizing and consolidating these portions into the attached ITCS (Appendix A).
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                            This consultation process is consistent with the ITCS Framework that NERC published in the summer of 2023. That Framework established NERC's plan to engage with its executive leadership, Regional Entities across different levels of leadership and technical expertise, and industry. This plan included the ERO Enterprise's coordination with an ITCS Advisory Group comprised of diverse industry experts (including, for example, those from the Department of Energy (“DOE”), the Commission, and transmission planners from across the BPS), as well as additional outreach to transmitting utilities.                             *See,*                             Appendix B (list of stakeholder engagement activities), Appendix C (letters to transmitting utilities for feedback); and Appendix D (Advisory Group and ITCS Study Team Rosters and List of Public Meetings).                        
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                            In accordance with the Framework illustrated above, NERC involved Regional Entities in the ITCS on a weekly basis to design and execute the ITCS and has met with the Advisory Group approximately every month to obtain input on ITCS design, execution, and findings. These groups were also asked to provide feedback on draft materials, such as the initial draft Framework, subsequent scope documents for different parts of the ITCS, and the portions of the ITCS that were rolled out in phases and culminated in the ITCS attached at Appendix A. All Advisory Group meeting presentations were publicly posted on NERC's ITCS web page. Comments from Advisory Group members on various parts of the ITCS were also posted on NERC's ITCS web page along with NERC's consideration and responses. The process ensured that NERC received input during each stage of the ITCS from its initial framing to more detailed scoping and throughout the ITCS while the ERO Enterprise study team examined the issues and finalized decisions.[44] 

                            To maximize the opportunity for stakeholder consultation, NERC published draft portions of the ITCS on its web page (after seeking Advisory Group feedback) in stages. First, NERC published an Overview report introducing the ITCS and its approach in June 2024. Second, NERC published its calculated total transfer capability in August 2024. Third, in November 2024, NERC published its proposed recommended prudent additions to total transfer capability in certain regions of the U.S. and recommended means to meet and maintain transfer capability today and as enhanced after consideration of the ITCS recommendations. (Part 2 & 3 Report). These three parts were consolidated after final revisions into the attached ITCS (Appendix A). NERC plans to issue a fourth report in 2025 studying transfer capabilities from the U.S. to Canada and between Canadian provinces.[45] 

                            In addition, NERC sent three sets of letters to all transmitting utilities in 2024 to obtain feedback on the ITCS.[46]                                                          The first letter was sent in January of 2024 seeking input generally on the ITCS, posted framework, and scope documents. The second letter was sent in September of 2024 to solicit input from transmitting utilities on the ITCS Overview report, total transfer capability report (Part 1), and Advisory Group materials (which included material on considerations and criteria to determine any recommended prudent additions to transfer capability). NERC's third letter to transmitting utilities was issued November 4, 2024, after the final in-person Advisory Group meeting, to solicit input on NERC's proposed recommended prudent additions and recommendations on how to meet and maintain current total transfer capability and transfer capability as enhanced by any additions (the Part 2 & 3 report). NERC's preliminary recommendations for prudent additions were also shared with the Advisory Group in September 2024 with publicly posted materials available on the ITCS web page to provide ample opportunity for comments before the Part 2 and 3 publication and before finalizing a final report.                        

NERC takes this opportunity to thank all those stakeholders and members of the ERO Enterprise who participated in the ITCS. This feedback has been instrumental in developing a nuanced study that is unique in terms of its geographic magnitude and overall approach to assessing energy adequacy under extreme conditions.

## IV. Conclusion

                            Therefore, for the reasons set forth above, NERC hereby submits this ITCS to the Commission as directed by the U.S. Congress in the Fiscal Responsibility Act. The ITCS finds that while current total transfer capability is largely sufficient to support energy adequacy at present, when calculating energy margin analysis and extreme weather over a forward-looking ten-year outlook, there may likely be insufficient transfer                                   ( print page 105801)                                capability. Based on the identified deficiencies that reveal certain transmission planning regions at risk for energy inadequacy, the ITCS recommends 35 GW of additional total transfer capability as a prudent measure to demonstrably strengthen reliability subject to coordination between governmental authorities, policy makers, and industry. NERC also plans to continue evaluating transfer capability as a regular part of its assessments going forward such as the LTRA. NERC on behalf of itself and the full ERO Enterprise, looks forward to continuing to participate in this discourse and preparing North America to meet the needs of the modern grid.                        

Respectfully submitted,

/s/Candice Castaneda

                            Candice Castaneda, Senior Counsel, North American Electric Reliability Corporation, 1401 H St. NW, Suite 410, Washington, DC 20005, (202) 400-3000,                             *candice.castaneda@nerc.net.*

*Counsel for the North American Electric Reliability Corporation.*

Date: November 19, 2024.
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# Footnotes

1.                                 Fiscal Responsibility Act of 2023, Public Law 118-5, 137 Stat 10, sec. 322 (2023).                        
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2.                                 The full text of this document is available on eLibrary in PDF and Microsoft Word formats (with color graphics) for viewing, printing, and/or downloading.                        
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3.                                 Federal Power Act (FPA) section 215 provides that the Commission may certify an Electric Reliability Organization, the purpose of which is to develop mandatory and enforceable Reliability Standards, subject to Commission review and approval. 16 U.S.C. 824o(c). The Commission subsequently certified NERC as the Electric Reliability Organization.                             *N. Am. Elec. Reliability Corp.,*                             116 FERC ¶ 61,062,                             *order on reh'g and compliance,*                             117 FERC ¶ 61,126 (2006),                             *aff'd sub nom. Alcoa, Inc.*                             v.                             *FERC,*                             564 F.3d 1342 (D.C. Cir. 2009).                        
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4.                                 Transmitting utility is defined in 16 U.S.C. 796 as “an entity (including an entity described in section 824(f) of [title 16]) that owns, operates, or controls facilities used for the transmission of electric energy—(A) in interstate commerce; (B) for the sale of electric energy at wholesale.”                        
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5.                                 18 CFR 37.6(b)(1)(vi) (2024).                        
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6.                                 Fiscal Responsibility Act of 2023, Public Law 118-5, 137 Stat 10, sec. 322 (2023).                        
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7.                                                             *See*18 CFR 385.2001(a)(1)(iii) (2024).                        
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8.                                     Fiscal Responsibility Act, H.R. 3746 (2023) [hereinafter Fiscal Responsibility Act].                                 *See*                                 Section 322 of the Fiscal Responsibility Act (providing, “The Electric Reliability Organization . . . in consultation with each regional entity . . . and each transmitting utility (as that term is defined in section 3(23) of such Act) that has facilities interconnected with a transmitting utility in a neighboring transmission planning region, shall conduct a study of total transfer capability as defined in section 37.6(b)(1)(vi) of title 18, Code of Federal Regulations, between transmission planning regions that contains the following:                            

(1) Current total transfer capability, between each pair of neighboring transmission planning regions.

(2) A recommendation of prudent additions to total transfer capability between each pair of neighboring transmission planning regions that would demonstrably strengthen reliability within and among such neighboring transmission planning regions.

(3) Recommendations to meet and maintain total transfer capability together with such recommended prudent additions to total transfer capability between each pair of neighboring transmission planning regions.”).
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9.                                                                     *Rules Concerning Certification of the Electric Reliability Organization; and Procedures for the Establishment, Approval, and Enforcement of Electric Reliability Standards,*                                 Order No. 672, 114 FERC ¶ 61,104,                                 *order on reh'g,*                                 Order No. 672-A, 114 FERC ¶ 61,328 (2006) [hereinafter Order No. 672]. NERC was certified by the Commission as the ERO, pursuant to § 215(c) of the Federal Power Act (“FPA”), by Commission order issued July 20, 2006.                                 *Order Certifying the North American Electric Reliability Corporation as the Electric Reliability Organization and Ordering Compliance Filing,*                                 116 FERC ¶ 61,062 (2006) [hereinafter NERC ERO Certification Order].                            
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10.                                     The Regional Entities are (i) Midwest Reliability Organization (“MRO”); (ii) Northeast Power Coordinating Council, Inc. (“NPCC”); (iii) ReliabilityFirst Corporation (“ReliabilityFirst”); (iv) SERC Reliability Corporation (“SERC”); (v) Texas Reliability Entity, Inc. (“Texas RE”); and (vi) Western Electricity Coordinating Council (“WECC”). Please note, unless otherwise defined herein, all capitalized terms should be assigned the meanings reflected in the NERC Glossary posted on NERC's website.                            
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11.                                     In addition, results that include transfer capabilities between the U.S. to Canada and between Canadian provinces is planned for the first quarter of 2025. While evaluating Canada is outside the specific congressional mandate, the interconnectedness of the North American BPS warrants analysis of Canada.                            
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12.                                     Prudence means whether the recommendations are the type that a reasonable entity would make in good faith under the same circumstances, and at the relevant point in time.                                 *See infra*                                 Section II.b. The ITCS is not an evaluation of economics, siting, or environmental impacts.                            
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13.                                     Transfer capability or “TTC” is the amount of electric power that can be moved or transferred reliably from one area to another area of the interconnected transmission system by way of all transmission lines (or paths) between those areas under specified system conditions. 18 CFR 37.6(b)(1)(vi).                            
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14.                                     Via an energy margin analysis that uses a ten-year forward-looking case that accounts for extreme weather, resources, and demand growth as described below and detailed in Appendix A.                            
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15.                                                                     *Supra*                                 note 1.                            
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16.                                     An explanation of the grid can be found on the U.S. Energy Information Administration website. U.S. Energy Information Administration,                                 *Electricity Explained*                                 (Mar. 26, 2024),                                 *https://www.eia.gov/​energyexplained/​electricity/​*                                 (including detailed subtopics under “Also in Electricity Explained”).                            
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17.                                                                     *See*                                 Appendix A, ITCS at p. 1 and Chapter 11 (summarizing ITCS limitations and potential further considerations).                            
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18.                                     The energy margin analysis (which identified the deficiencies) constitutes steps 1 and 2 of the 6-step process.                            
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19.                                     Specifically, 11 out of 23 transmission planning regions.                            
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20.                                     NERC highlights that transmission and TTC are part of a more expansive equation underlying energy adequacy in a modern grid, which includes matters such as available generation. The ITCS relies, for example, on future resource assumptions. If these change it could impact the energy margin analysis underlying the Part 2 analysis.                            
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21.                                     Please see the ITCS for discussion of additional factors that stakeholders may analyze.                            
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22.                                     NERC's relationship with the Regional Entities is governed by Regional Delegation Agreements or “RDAs” filed with the Commission every five years. 18 CFR 39.8. A delegation agreement shall not be effective until it is approved by the Commission.                                 *See also, N. Am. Elec. Reliability Corp.,*                                 133 FERC ¶ 61,061 (2010),                                 *order denying reh'g,*                                 134 FERC ¶ 61,179 (2011),                                 *order on compliance filing,*                                 137 FERC ¶ 61,028 (2011).                                 *N. Am. Elec. Reliability Corp.,*                                 153 FERC ¶ 61,135 (2015) (approving pro forma and individual RDAs, subject to compliance filing) and                                 *N. Am. Elec. Reliability Corp.,*                                 Docket No. RR15-12-001 (Mar. 23, 2016) (delegated letter order) (accepting final pro forma and individual RDAs) (collectively “2015 RDA Order”); and Order Conditionally Approving Revised                                 *Pro Forma*                                 Delegation Agreement and Revised Delegation Agreements with Regional Entities, 173 FERC ¶ 61,277 (2020).                            
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23.                                     Public Law 109-58, title XII, § 1211(b), Aug. 8, 2005, 119 Stat. 946.                            
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24.                                     16 U.S.C. 824o(a)(2).                                 *See also*                                 § 824o(c) (providing the ERO certification criteria).                                 *See also*Public Law 109-58, title XII, § 1211(b), Aug. 8, 2005, 119 Stat. 946 (clarifying, “[t]he Electric Reliability Organization. . . and any regional entity delegated enforcement authority. . . are not departments, agencies, or instrumentalities of the United States Government.”).                            
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25.                                     Order No. 672 at PP 183-191.                            
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26.                                                                     *See*                                 NERC ERO Certification Order.                            
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27.                                     16 U.S.C. 824o(g).                            
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28.                                                                     *Supra*                                 note 1.                            
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29.                                     The 12 weather years to ensure the ITCS examined extreme weather were selected from 2007-2023 and are non-contiguous.                            
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30.                                                                     *Supra*                                 note 1.                            
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31.                                     Some geographic neighbors that were not electrically connected were evaluated as potential new connections in Part 2 of the ITCS as NERC evaluated potential recommendations to enhance transfer capability.                            
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32.                                                                     *See*                                 ITCS Appendix A (providing detailed explanation on the Study and its design).                            
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33.                                     Base cases are computer models that simulate the behavior of the electrical system under various conditions as a snapshot in time. Base cases were not required for ERCOT and Québec Interconnections for purposes of the ITCS as they were only tied with the Eastern Interconnection via dc ties. Also, small ERCOT dc ties to Mexico were omitted from evaluation and the ERCOT-Mexico interface was outside the scope of the document.                            
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34.                                     Contingencies were based on NERC Reliability Standard TPL-001-5.1 category P1 contingencies (100 kV and above).                            
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35.                                     As this is a study, observed TTC may differ from the conclusions in the ITCS based on operational conditions.                            
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36.                                                                     *Supra*                                 note 1.                            
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37.                                                                     *See, e.g., New England Power Co.,*                                 31 FERC ¶ 61,047 at 61,084 (1985); and                                 *Potomac-Appalachian Transmission Highline, LLC,*                                 140 FERC ¶ 61,229 at P 82 (Sept. 20, 2012).                            
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38.                                     In two cases, it was not possible to eliminate all energy deficiencies, even by increasing transfer capability, due to wide-area resource shortages. In ERCOT and California North, resource deficiencies remained even after increasing transfer capability by 14 GW and 1 GW, respectively.                            
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39.                                     Please see NERC's website for more information regarding these issues.                                 *See also,*                                 ITCS, Appendix A, Chapter 11 (providing further considerations). NERC has focused the ITCS on transfer capability in accordance with Congressional directive.                            
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40.                                                                     *Supra*                                 note 1.                            
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41.                                     Without limitation on future analysis or action, NERC does not recommend any Reliability Standards changes at this time as a result of the ITCS.                            
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42.                                                                     *Supra*                                 note 1.                            
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43.                                                                     *See, e.g., Envtl. Def. Ctr., Inc.*                                 v.                                 *U.S. Envtl. Protection Agency,*                                 344 F.3d 832 (9th Cir. 2003) (highlighting that consultation was reflected by activities such as circulating a draft report to stakeholders, establishing an advisory committee, holding several meetings as part of that advisory committee, and obtaining input from State and municipal representatives on drafts); and                                 *South Carolina*                                 v.                                 *United States,*                                 329 F. Supp. 3d 214 (2018) (finding that the Department of Energy engaged in a meaningful exchange of information and views with governor prior to the decision);                                 *cf. Cal. Wilderness Coalition*                                 v.                                 *U.S. Dep't of Energy,*                                 631 F.3d 1072, 1087, 1080, 1085) (2011) (explaining that consultation entails a meaningful exchange and more than public comment).                            
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44.                                     Examples included the decision to study simultaneous import capability and use 2024/2025 system conditions (or “base cases”) to calculate current total transfer capability.                            
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45.                                     While this part is outside the specific congressional mandate, the interconnectedness of the North American BPS warrants analysis of Canada.                            
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46.                                     The Fiscal Responsibility Act required NERC to consult with neighboring transmitting utilities, however, to facilitate the broadest opportunity for consultation NERC sent these letters to all transmitting utilities.                            
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BILLING CODE 6717-01-P

BILLING CODE 6717-01-C

[FR Doc. 2024-30493 Filed 12-26-24; 8:45 am]